Overseas Headlines- February 4, 2019

United States:

Tariffs May Live On as Trump’s Best Bet to Enforce a China Deal

American tariffs are what got China to the negotiating table in the first place, the Trump administration argues. Those same tariffs may be needed even after a trade deal is reached –- to ensure that China sticks to it. That’s the view of several former U.S. officials who’ve dealt with Beijing in the past. They’re looking a step ahead, because the world’s biggest economies need to reach a trade accord first, before worrying about policing it. But they inched closer this week, and President Donald Trump — speaking after two days of talks in Washington — pledged that any deal will contain “strong enforcement language.’’ His aides are still figuring out what that should be — and how to get China to sign off. Trump advisers say China has failed to meet commitments in the past, one reason they decided early in the president’s term to emphasize the stick over the carrot. U.S. tariffs on Chinese goods have upended financial markets, shaken the world economy, and caused businesses to reconsider their supply chains. They’re due to more than double on March 2 if the countries can’t reach a deal. But even if they can, analysts say, that doesn’t mean the import duties will disappear forever. Any accord is likely to include assurances by China on issues such as granting licenses to U.S. companies without hidden regulations that undermine them; buying more American goods over the long run, rather than just conceding a one-time feelgood boost; and punishing theft of U.S. commercial secrets. And all those commitments will need to be monitored by the U.S.

The Bank of England may not be worried about U.K. household debt, but it looks like ordinary people are. Even though employment, income and spending levels are rising, Britons’ well-being isn’t improving, Office for National Statistics data published Monday showed. That may be due to concerns about rising debt repayments, it said. The BOE has been relatively sanguine about debt levels, with Deputy Governor Ben Broadbent last month describing suggestions that they’re unsustainably high as “slightly puzzling.” That’s a slight softening of rhetoric from BOE officials, who have previously expressed concern about the rapid buildup of debt used to finance cars and other goods. The amount U.K. residents pay in interest on loans is now the highest seen since the start of 2009, with recent increases driven by payments on unsecured borrowing such as on credit cards and overdrafts, the ONS found. Household spending has outgrown income for the past two years, which is linked to analysis that “households are spending beyond their means,” it said. It is also weighing on people’s optimism about their own financial situation and that of the overall economy over the next year, according to European Commission data. Now the boom looks to be slowing. Consumer credit grew at its weakest annual pace in four years in December, while borrowing on credit cards rose the least since 2014.

Russia’s economy grew at the fastest pace in six years in 2018, outstripping economist estimates, as construction got a boost from the World Cup and the start of natural gas project in Siberia. Growth accelerated to 2.3 percent, the most since 2012, after construction surged, the Federal Statistics Service reported in its first estimate Monday. The majority of analysts polled in a Bloomberg survey forecast growth of 1.9 percent for the year and the highest estimate was for 2.2 percent. Economists have questioned whether the pace of growth is sustainable and how much of it was artificially boosted by one-off factors such as the start of Novatek PJSC’s $27-billion Yamal LNG project. The 2018 soccer World Cup also appeared to provide a boost to the restaurant and hotels sector, which expanded 6.1 percent. Very little of the impact is filtering through to consumers, who are struggling amid stagnant incomes and rising inflation. “We can for sure pretend that this growth is good, but, in fact, we need faster growth, especially after several years of recession,” said Anton Tabakh, the chief economist at Moscow-based credit assessor RusRatings. “It’s obvious that the consumer isn’t feeling much benefit.” Russia is still punching well below its weight compared to emerging-market peers and its own performance before recession struck in 2015. Putin promised after his election last year to bring growth to a level that exceeds the global average of 3.7 percent by the end of his six-year term.